Consumer behavior _ introduction


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Consumer behavior _ introduction

  1. 1. Session 1Introduction to Consumer; Significance & Essentials of Consumer Behavior CONSUMER BEHAVIOR
  2. 2. AGENDA POINTS Why so much focus on this entity called the “Consumer”: what is her/his significance to Marketing? Consumer Behavior Essentials: what does it comprise? What do we mean by buzz-phrases like “Customer Orientation”, “Understanding Consumer Needs”, “Customer Value”, “Customer Satisfaction”, “Life-time Value” Is understanding the consumer a complex process? If so, why? What do we mean by Diversity of Consumer Behavior? What do we mean by Market Segmentation?
  3. 3. WHO IS A CONSUMER? General Discussion “All those who buy or could potentially buy & use any good or service generated in the economy”  Individuals  Households  Organizations Therein also lies the subtle difference between Consumer & Customer
  4. 4. WHY SO MUCH CONSUMER FOCUS? General Discussion Consumer at the very heart of the Marketing concept that evolved in the late 1950s  Production of only those goods & services that the consumers would buy Hence, consumer understanding began assuming huge significance for businesses at large Terms such as Understanding Consumer Needs, Customer Orientation & Customer Value started becoming buzzwords  Customer Needs: Understanding what Consumers want  Customer Orientation: Thinking “Consumer” at all times & orienting one’s business accordingly to deliver as per Consumer & Customer Needs  Customer Value: Difference between a Customer’s perceived benefits & the resources used to obtain those benefits
  5. 5. WHY SO MUCH CONSUMER FOCUS? Further, in the context of Brand Marketing, Brands are valuable to companies because they are valuable to consumers  People will pay more for a branded product than a generic one & more for a favored brand than the alternatives Obvious then that a brand that has forged a strong, enduring bond with consumers should provide a financial advantage to a company  Particularly in the context of increasing competitiveness Hence, terms such as Customer Satisfaction & Customer Retention an integral part of Marketing lexicon today  Customer Satisfaction: Customer’s perception of the performance of a product in relation to his/her expectation  Customer Retention: Retaining satisfied customers In short, our Consumption related behavior impacts New Product Development & Success/Failure of Businesses
  6. 6. QUESTIONS MARKETERS FACE? WHAT products & brands do people buy? WHY do people buy the products & brands that they do? WHEN do they buy them? WHERE do they buy them? HOW OFTEN do they buy them? HOW do they actually use them? HOW OFTEN do they use them? HOW do they evaluate them after the purchase? What do consumers think about our products & those of our competitors? What do they think about possible improvements in our products? WHAT are their attitudes towards our products & our promotional efforts?
  7. 7. CONSUMER BEHAVIOR?“The Behavior that people display in searching for, purchasing, using, evaluating & disposing of products & services that they expect will satisfy their needs.”“The mental & emotional processes & the physical activities of people who purchase & use goods & services to satisfy particular needs & wants.”“The mental & emotional processes & the observable behavior of people during searching, purchasing & post consumption of a product or service.”In short, the term “Consumer Behavior” subsumes the entireprocess…From Planning to Acquire something, to Actual Consumptionthrough till Post Consumption & even Disposal
  8. 8. CONSUMER BEHAVIOR?Discuss Consumer Behavior across Products & ServicesCar / Motor BikeToilet SoapCasual ShirtFormal ShoesRefrigeratorHouseCareer choiceInsuranceMusic SystemEating OutVacation
  9. 9. CONSUMER BEHAVIOR?Study of Consumer Behavior for a product/service will revealanswers to critical questions such as: What kinds of consumers buy that product/service? Why do they buy it? What do they look for in it? What benefits do they seek? How much are they willing to pay? How many are likely to buy now? Do they wait for prices to come down? Do they look for some freebies?These have a DIRECT bearing on Marketing - designing the productas well as the marketing mix
  10. 10. SO, IS CONSUMER UNDERSTANDING COMPLEX ?Discuss Is it really a complex process at all? If so, in what way is it complex? What makes it so complex?
  11. 11. NEEDS All of us have different kind of needs:  Physiological / Biological Needs: Air, Water, Food, Clothing, Shelter, Sex  Acquired / Psychological Needs: Self-Esteem, Prestige, Affection, Power, Achievement Broadly similar Biological Needs: however, vastly different Acquired Needs
  12. 12. DIVERSITY OF CONSUMER BEHAVIOR All of us consumers are unique Different Attitudes & Beliefs about Life in general Different things that drive us, interest us, engage us Different Needs & Wants Different Roles that we play in life & in the entire Consumption process – varies from one product to another
  13. 13. CONSUMER BEHAVIOR DIVERSITY - UNIQUENESS All of us consumers are unique  Different Attitudes & Beliefs about Life in general  Different things that drive us, interest us, engage us  Different ways in which we process various things that we get exposed to  Different Needs & Wants These are conditioned by:  The Culture that we belong to  Our Upbringing & Education  Environment (People around us that we interact with regularly)  Experiences  Age & Stage in Life Amidst this diversity, many of us are also similar to one another  “Segmentation”: Dividing one whole mass into groups based upon similarity of Needs & Wants  “Targeting”: Addressing specific segments  “Positioning”: Developing a distinct image for an offering in their minds
  14. 14. CONSUMER BEHAVIOR DIVERSITY - BUYING ROLES We also play Different Roles in life & in the entire Consumption process – varies from one product to another  Initiator: Determines un-fulfilled Need/Want  Influencer: One who (somehow) influences a Buying decision, Actual Purchase and/or Use of the Product  Decider: One who actually determines what will be finally chosen  Gatekeeper: Influences a Family’s processing of information  Buyer: One who actually makes the Purchase transaction  User/s: One who is directly involved with the Use or Consumption of the purchased product Buyer Roles: Exercise  Car / Motorbike / House / Computer / Detergent / Toothpaste Why need to understand ALL ROLES? (Discuss)
  15. 15. CONSUMER BEHAVIOR DIVERSITY – CUSTOMER TYPES There are also different Customers Types – according to Usage  Loyalists: Highly Satisfied & Highly Loyal  Apostles: Experiences exceed Expectations & who actively spread the word  Defectors: Low Satisfaction & Low Loyalty; Neutral but likely to shift  Terrorists: Defectors with negative experiences & who will spread the word  Hostages: Unhappy, but who stay due to either lack of competition or price  Mercenaries: Highly satisfied, but Low Loyalty & may defect due to lower price elsewhere or on impulse
  16. 16. CONSUMER BEHAVIOR DIVERSITY – CUSTOMER TYPES High Apostle Mercenary Loyalist SATISFACTIONMedium Defector Hostage Terrorist Low LOYALTY Low Medium High
  17. 17. CONSUMER BEHAVIOR DIVERSITY – CUSTOMER TYPES Apostle Most Desirable Loyalist Mercenary Hostage Defector Terrorist Least Desirable
  18. 18. CB IMPLICATION ON MARKETING Analyze Market opportunity: Identifying unfulfilled Needs & Wants  Examining Trends & Conditions  Consumers’ Lifestyles  Income levels  Emerging Influences  E.g. Convenience & Leisure products thanks to Dual income households Selecting Target Market: Review of Market Opportunities helps identify distinct Consumer Segments  Identifying them & how they make purchase decisions enables the marketer to design & market products/services as per needs/wants
  19. 19. CB IMPLICATION ON MARKETING Marketing-mix Decisions: Once unsatisfied needs/wants identified, determining the right mix of the 4 Ps  Product:  Specific decisions w.r.t. Shape, Size, Variants, Features..  Also Packaging, key aspects of Service, Warranties..  Price:  What Price to charge? Is the consumer price-sensitive?  Should Discounts be given?  Do consumer equate lower price with lower quality?  Distribution:  Should one sell through all retail outlets or selected ones?  Existing multi-brand outlets or create Exclusive ones?  Is location a key criterion?  Is there a case for Direct marketing?
  20. 20. CB IMPLICATION ON MARKETING Marketing-mix Decisions: Once unsatisfied needs/wants identified, determining the right mix of the 4 Ps  Promotion:  Which among Advertising, Personal Selling, Sales Promotion & Direct Marketing most suitable to effectively reach consumers?  Should it be one approach alone or a combination?  Understanding Consumer habits in the context of the Category the key (Industrial products v/s Consumer products v/s Pharma v/s Insurance) Use in Social & Non-profits Marketing  Designing Marketing Strategies for social programs
  21. 21. CHALLENGE TODAY Consumers hold more power Have access to more information Exchange between Marketers & Customers increasingly interactive & instantaneous Marketers can gather more information about consumers more quickly & easily Impact reaches beyond PC-based connection to the Web
  22. 22. CONSUMER BLACK BOX MODEL ENVIRONMENTAL BUYER’S BLACK BOX FACTORS BUYER’S Buyer RESPONSEMarketin Environment Characteristi Decision Processg Stimuli al Stimuli cs Economic Attitudes Problem recognition Product choice Product Technological Motivation Information search Brand choice Price Political Perceptions Alternative Dealer choice evaluation Place Cultural Personality Purchase timing Purchase decisionPromotion Demographic Lifestyle Purchase Post-purchase amount Natural Knowledge behavior
  23. 23. Session 1Introduction to Consumer; Significance & Essentials of Consumer Behavior CONSUMER BEHAVIOR
  24. 24. Session 1Introduction to Consumer; Significance & Essentials of Consumer Behavior CONSUMER BEHAVIOR
  25. 25. Session 1Introduction to Consumer; Significance & Essentials of Consumer Behavior CONSUMER BEHAVIOR